Thailand’s leading property companies have started to accumulate plots from landowners as well as small- and medium-sized developers at prices that are 10 to 15 per cent lower than last year’s.

This is due to the country’s economic slowdown which has helped lower land prices in prime locations.

According a survey conducted by The Nation this week, leading property companies such as Land & Houses, TCC Land, Preuksa Real Estate and Asian Property Development have started to accumulate land located close to the mass-transit system and the central business district, as prices in these locations have dropped between 10 per cent and 15 per cent compared to last year.

Land prices for some prime locations dropped slightly, as a number of small- and medium-sized property developers face financial problems, such as cash-flow shortage and an inability to get credit.

Land prices at Sukhumvit Road, from Soi 103 to Soi 107, dropped from Bt120,000 per square wah last year to between Bt85,000 and Bt100,000 per square wah. Land prices on Sathorn Road to Taksin Bridge have fallen from Bt300,000-Bt400,000 per square wah last year to between Bt250,000 and Bt350,000.

TCC Land vice president Soammaphat Traisorat said this was a good time to buy land in the central business district as landowners have lowered prices as real demand drops.

“Land is now reasonably priced as compared to earlier, when speculation was rife,” he said.

TCC Land is negotiating with landowners who are now offering land at Bt200,000-Bt250,000 per square wah from last year’s Bt300,000, he said.

Earlier, TCC Land had said the company would suspend the launch of a new project due to the country’s economic slowdown. But now it believes this is the time to accumulate land for new projects for launch by the end of the year and next year as prices become more reasonable.

“This is a good time to collect land to develop residential and hospitality properties for launch by the end of the year and next year,” Soammaphat said.

Meanwhile, a number of small- and medium-sized property companies have decided to sell their land bank since the second quarter of this year to improve their cash flow.

For example, Land & Houses bought two plots from Prinsiri. These include two rai at Taksin Road and 47 rai at Krungthepkritra Road, together worth about Bt150 million. Land & Houses also bought land on Sukhumvit Soi 101/1 from the Leenabanchong family, who had earlier planned to develop a condominium project on that plot.

Metro Star Property has appointed CB Richard Ellis as its sales agent to sell up to four rai of land at Sathorn Road, opposite St Luis Hospital.

According to research conducted by Agency For Real Estate, when the country’s economy registers slower growth and is faced with high costs due to higher oil and construction raw-material prices, a number of property companies which do not have cash flow and enough capital to develop their project will be forced to sell their land bank.

Due to this, prices will drop as compared to the boom experienced from 2006 to last year.

“This is the time for leading property companies that have strong financial status, to buy land at reasonable prices as many property companies are facing a cash-flow problem,” the property expert said.

Real Estate Information Centre general-director Samma Kitsin said the house register for Bangkok and suburban areas recorded 19,000 units in the first four months of the year, a drop of 10 per cent compared to the same period last year. Of these 56 per cent, or 11,000 units, were registered in Bangkok itself.

“We believe the register for this year will record about 70,000 units, a drop of 5 per cent from 73,800 units last year,” Samma said.

Last week, Finance Minister Surapong Seubwonglee said the government could consider more measures to boost the property industry if it finds a significantly negative impact arising from higher construction costs.

Somluck
Srimalee
Somluck Srimalee is a journalist with The Nation, Bangkok's independent English language newspaper and specialises in the property and real estate sectors.
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Somluck Srimalee
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